Is Sarbanes Worth the Cost?

New internal accounting rules are costing utilities a lot of time and money. While the regulations are aimed at discovering possible errors and potentially may avert a financial disaster, they do not replace good honor codes that are embraced by everyone at every level of all companies.

Financial regulators along with American companies have come under fire for lackadaisical oversight. Some of the problems resulted in well-reported bankruptcies that have led to strict rules and regulations, most notably the Sarbanes-Oxley Act enacted in 2002. The most costly of many provisions in the Act is Section 404, which forces publicly-held companies to review their internal controls to ensure that the public is getting an accurate picture—a process that requires the signatures of auditing firms and top corporate managers.

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